You’ve worked hard. You’ve saved a lot of money, made sacrifices and deferred consumption. And you have been diligent, skilled and yes, lucky, when it comes to making investment decisions within your Self-Directed IRA. So you’ve accumulated a large balance. And you want to be able to maximize the benefit of your accumulation for yourself and your loved ones.

Congratulations! As problems go, that’s a nice one to have. But income taxes are steep when it comes to higher income levels. Unless everything’s in a Roth account, the IRS is going to expect a substantial cut. Owning a large or jumbo Self-Directed IRA can feel like holding a tiger by the ears: You know you’re going to get mauled as soon as you let go – but you can’t hold on to the thing forever!

Of course, that’s what we call a ‘first world problem.’ But there are some things you can do to maximize the after-tax benefit of your retirement assets for yourself and your family:

Maximize use of Roth Accounts. You can contribute to Roth IRAs, provided you meet the income limits. You can also establish a designated Roth account within a solo 401(k) for your company or for your self-employed income and use that. In years where income is high, you may want to make deductible contributions to lower your AGI and expose less of your income to your highest marginal tax rate. In years when your income is low, you can lean towards the Roth and take advantage of tax-free growth.

Bump Up Distributions in Low-Income Years. If you have an off year in business and you’re age 59 ½ or older or you otherwise qualify for a penalty-free distribution from a tax-deferred retirement account, and you think your income and income tax rate will be higher in retirement than it is now, go ahead and take the distribution now to even out your income.

Execute a Section 72(t) Plan. The sooner you start taking regular, systematic distributions, the lower those distributions will be. This can help lower your income while giving you access to the capital now. You can use this to make investments that are taxable under lower long-term capital gains tax rules, or real estate or life insurance moves that qualify for 1031 or 1035 tax-free exchanges down the road.

Have a plan for selling accumulated company stock. If you are sitting on a large amount of company stock you received by participating in your 401(k) plan, you can take advantage of net unrealized appreciation (NUA) rules. This may allow you to pay income taxes on the purchase price of the stock, and a lower capital gains tax on the rest. This is normally preferable to paying full-boat ordinary income tax on the whole shebang, which you will eventually have to do if you just let it ride within your 401(k) or IRA.

For details, speak with your tax advisor.

Dump the percentage fee and go with a flat rate per transaction. If you have a large account, you’re probably also paying large AUM fees, commissions and expense ratios. But if you’re managing the money yourself, there’s no point in paying a manager an AUM fee for doing nothing. If you’re handling all the due diligence and transactions, you’re likely much better off opening an account with American IRA and paying a low flat fee for the paperwork and record keeping associated with a transaction. This is normally much more efficient than paying thousands or tens of thousands in AUM fees every year for someone to do nothing more than send you a statement (bet they charge a monthly statement fee on top of everything else, too!)

Need more ideas on how to use self-directed retirement accounts? Want more information about the rules and transactions? Want to save money on fees? Call American IRA, LLC today at 866-7500-IRA(472) or visit our website at www.americanira.com.